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Friday, 22 October 2010

Selling The Family Silver

On the web site “The Big Picture” (ritholtz dot com blog) today was this item on a sour note about the way things are going in the USA. It is an instructive piece if you recall that compared to the US economy we are just part of the world chorus. The EU makes up a lot of the rest of the chorus, but alas does not sing in tune.

“America is quite literally for sale, at rock-bottom prices, and the buyers increasingly are the very people who scored big in the oil bubble.

Thanks to Goldman Sachs and Morgan Stanley and the other investment banks that artificially jacked up the price of gasoline over the course of the last decade, Americans delivered a lot of their excess cash into the coffers of sovereign wealth funds like the Qatar Investment Authority, the Libyan Investment Authority, Saudi Arabia’s SAMA Foreign Holdings, and the UAE’s Abu Dhabi Investment Authority.

Here’s yet another diabolic cycle for ordinary Americans, engineered by the grifter class. A Pennsylvanian like Robert Lukens sees his business decline thanks to soaring oil prices that have been jacked up by a handful of banks that paid off a few politicians to hand them the right to manipulate the market.

Lukens has no say in this; he pays what he has to pay. Some of that money of his goes into the pockets of the banks that disenfranchise him politically, and the rest of it goes increasingly into the pockets of Middle Eastern oil companies. And since he’s making less money now,

Lukens is paying less in taxes to the state of Pennsylvania, leaving the state in a budget shortfall. Next thing you know, Governor Ed Rendell is traveling to the Middle East, trying to sell the Pennsylvania Turnpike to the same oil states who’ve been pocketing Bob Lukens’s gas dollars.

It’s an almost frictionless machine for stripping wealth out of the heart of the country, one that perfectly encapsulates where we are as a nation.

When you’re trying to sell a highway that was once considered one of your nation’s great engineering marvels, 532 miles of hard-built road that required tons of dynamite, wood, and steel and the labor of thousands to bore seven mighty tunnels through the Allegheny Mountains, when you’re offering that up to petro-despots just so you can fight off a single-year budget shortfall, just so you can keep the lights on in the state house into the next fiscal year, you’ve entered a new stage in your societal development.

You know how you used to have a job, and a house, and a car, and a wife and a family, and there was food in the fridge — and now you’re six months into a drug habit and you’re carrying toasters and TVs out the front door every morning just to raise the cash to make it through that day?

That’s where we are. While a lot of this book is about how American banks used bubble schemes to strip the last meat off the bones of America’s postwar golden years, the cruelest joke is that American banks now don’t even have the buying power needed to finish the job of stripping the country completely clean.

For that last stage we have to look overseas, to more cash-rich countries we now literally have to beg to take our national monuments off our hands at huge discounts, just so that our states don’t fall one by one in a domino rush of defaults and bankruptcies.

In other words, we’re being colonized, of course it’s happening in a clever way, with very careful paperwork, so we have the option of pretending that it’s not actually happening, right up until the bitter end.”

Unquote.

There are no prizes of thinking of another country which has had much the same problems and which has sold off so many of its national assets to fund revenue expenditures.